15. Company A owns a tour business that services tourists. Company B offered discounts to tourists which led to a decline in Company A's bookings. Company A decides to advertise its own discounts to increase bookings that were going to Company B.
Answer: C
Company A is engaging in market penetration.
By advertising its own discounts to attract tourists away from Company B, Company A is aiming to increase its market share within the existing market, which is characteristic of a market penetration strategy.
A) Market development
Market development involves entering a new market or targeting a different customer segment with existing products. In this case, Company A is not exploring new markets but rather trying to enhance its position in the current market against Company B's competition.
B) Diversification
Diversification refers to introducing new products or entering new markets that are different from the current business model. Company A is not introducing new products or services but is instead focused on leveraging discounts to boost sales of its existing offerings.
C) Market penetration
Market penetration is aimed at increasing market share within existing markets by encouraging customers to switch from competitors. Company A's strategy of advertising discounts directly targets Company B’s customers, making this option the most accurate description of its actions.
D) New product development
New product development involves creating entirely new products to sell to customers. Company A is not developing new products but is instead promoting existing services through discounts, which does not align with this strategy.
Conclusion
Company A's strategy to advertise discounts is a clear example of market penetration, as it seeks to increase its share of the existing market by attracting customers away from a competitor. All other options fail to accurately describe the situation, as they either involve new markets or new products, which are not part of Company A's current approach.